6 ms·

> Afaik the tax situation in Europe is super complicated and you have to charge the tax of the country the customer is from. What's the relational behind such

> Afaik the tax situation in Europe is super complicated and you have to charge the tax of the country the customer is from. What's the relational behind such a complex tax system? Sounds like a good way to discourage people from trying out business ideas.

Diederich 9y ago
The EU is...complicated: https://www.youtube.com/watch?v=O37yJBFRrfg https://www.youtube.com/watch?v=O37yJBFRrfg
tlb 9y ago
It's an improvement over the pre-EU situation, where every country was independent and shipping something 100 miles to a neighboring country would require customs declarations and tariffs and possibly complying with different labeling laws, assuming the countries weren't actually at war with each other at the time. Tax authorities systematically underestimate how much they harm the economy through complexity.
- Silhouette 9y ago
  The VAT MOSS scheme we're talking about (currently) only applies to digital services, not physical products. The problems you mentioned don't apply in this context. There is absolutely nothing about this scheme that is better than before it was introduced. Nothing. Several years after it was introduced, as others have noted, some of the payment handling services have kind of caught up, to the point where if you can use one of them then you'll probably fly under the radar. You'll still have to spend time/money on the integration itself. You almost certainly still won't be fully compliant, because 100% compliance is practically impossible. You'll potentially be giving up a significant chunk of your margin in extra fees. And you'll still have the extra paperwork to do and the potential for an expensive audit by any of 28 member states' tax authorities if your number comes up. But at least you can carry on doing business in the meantime and hope for the best. This tax scheme is my go-to example of what happens when politicians who see a problem but have no idea what they're doing try to fix the problem anyway. Your final sentence is right on point, sadly.
  - Strom 9y ago
    > There is absolutely nothing about this scheme that is better than before it was introduced. Nothing. Under the previous scheme Luxembourg/Ireland would get a gigantic share of VAT. I guess you could argue that this money can be redirected by EU support programs to countries in need. I think that having the VAT go directly to the country closest to the buyer is a more optimal solution. Less dependence on EU welfare to know that your tax money is benefiting your community.
    - zerostar07 9y ago
      But that is already happening with regular taxes. EU allows apple and google to set up shop in Ire and do business throughout the EU. Why treat VAT so differently?
    - gingerlime 9y ago
      I think this was the aim of the scheme, but perhaps similar to the GDPR[0], it's hurting small businesses extremely disproportionately to larger ones... [0] https://en.wikipedia.org/wiki/General_Data_Protection_Regulation https://en.wikipedia.org/wiki/General_Data_Protection_Regula...
- zerostar07 9y ago
  Wait, if i understand correctly, we would be charging 0% VAT to other european countries if we were pre- EU, right?
  - TomMarius 9y ago
    Yes, but your customer would need to pay the VAT at the point of bringing the goods to his country. As you can see, the pre-EU laws are a bit outdated.
raarts 9y ago
Personally I find the sales tax system in the US much more complicated. At least in Europe the percentages are the same within each country, but in the US they differ per state, county and even per town.
- Silhouette 9y ago
  At least in Europe the percentages are the same within each country This isn't actually true. There are quite a few dependent territories and the like that are part of the same country but have different tax arrangements. There are also multiple VAT rates for different types of product or service in a lot of countries, with different rules from place to another about which products or services attract a lower rate.
  - raarts 9y ago
    Sure. The table can be found here[1]. But let's not pretend it's more complicated than it is, for a company that operates in a specific market, usually their products fall within the same VAT category. Unless you're Amazon or Bol that sells a range of products. In the US you basically can be sure that sales-tax varies by zip-code. I worked for a telecom company in the US that sent all their invoices to a specialized company, to have them calculate the tax, before sending them out to their customers. It was too complicated to do that on their own. Also because tax rates can and do change at the whim of some local city-government for example. And as far as I know tax rates in the EU are determined by the country-governments only, which means not very often. [1] https://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/taxation/vat/how_vat_works/rates/vat_rates_en.pdf https://ec.europa.eu/taxation_customs/sites/taxation/files/r...
    - Silhouette 9y ago
      You're right that many businesses will operate in specific markets, but even then it's still not always clear which rate should apply, and different classifications might apply in different member states or even different areas within the same member state. E-books were a controversial ambiguity when the new rules came in, for example. We could get more into how many technicalities there are in this system, but I think I'm just going to mention that the document you linked there is 116 pages long, which probably says all that needs to be said on that point. As for locations, there are plenty of potential gotchas there too. Would you like to guess the rule if the person who bought an e-book did so while on holiday on a cruise ship in the Mediterranean? And as for not changing very often, I think the shortest notice so far was just over a week from legislating the change to the new rate coming into effect (Greece in summer 2016). To this day, I'm aware of no standardised mechanism for alerting merchants to future changes in the relevant rates, nor any authoritative list of current rates available in a machine-readable format for automation purposes. So while I agree that we shouldn't pretend it's more complicated than it is, the current EU VAT situation is a complete mess full of traps and technicalities to catch out the unwary, and full compliance is effectively impossible. It's a bad system, made by people who don't understand how either digital markets or small businesses actually work.
zerostar07 9y ago
thats exactly what it is. And because small businesses can't lobby, nobody even acknowledges there's a problem.

Diederich 9y ago

The EU is...complicated: https://www.youtube.com/watch?v=O37yJBFRrfg https://www.youtube.com/watch?v=O37yJBFRrfg

tlb 9y ago

It's an improvement over the pre-EU situation, where every country was independent and shipping something 100 miles to a neighboring country would require customs declarations and tariffs and possibly complying with different labeling laws, assuming the countries weren't actually at war with each other at the time. Tax authorities systematically underestimate how much they harm the economy through complexity.

Silhouette 9y ago
The VAT MOSS scheme we're talking about (currently) only applies to digital services, not physical products. The problems you mentioned don't apply in this context. There is absolutely nothing about this scheme that is better than before it was introduced. Nothing. Several years after it was introduced, as others have noted, some of the payment handling services have kind of caught up, to the point where if you can use one of them then you'll probably fly under the radar. You'll still have to spend time/money on the integration itself. You almost certainly still won't be fully compliant, because 100% compliance is practically impossible. You'll potentially be giving up a significant chunk of your margin in extra fees. And you'll still have the extra paperwork to do and the potential for an expensive audit by any of 28 member states' tax authorities if your number comes up. But at least you can carry on doing business in the meantime and hope for the best. This tax scheme is my go-to example of what happens when politicians who see a problem but have no idea what they're doing try to fix the problem anyway. Your final sentence is right on point, sadly.
- Strom 9y ago
  > There is absolutely nothing about this scheme that is better than before it was introduced. Nothing. Under the previous scheme Luxembourg/Ireland would get a gigantic share of VAT. I guess you could argue that this money can be redirected by EU support programs to countries in need. I think that having the VAT go directly to the country closest to the buyer is a more optimal solution. Less dependence on EU welfare to know that your tax money is benefiting your community.
  - zerostar07 9y ago
    But that is already happening with regular taxes. EU allows apple and google to set up shop in Ire and do business throughout the EU. Why treat VAT so differently?
  - gingerlime 9y ago
    I think this was the aim of the scheme, but perhaps similar to the GDPR[0], it's hurting small businesses extremely disproportionately to larger ones... [0] https://en.wikipedia.org/wiki/General_Data_Protection_Regulation https://en.wikipedia.org/wiki/General_Data_Protection_Regula...
zerostar07 9y ago
Wait, if i understand correctly, we would be charging 0% VAT to other european countries if we were pre- EU, right?
- TomMarius 9y ago
  Yes, but your customer would need to pay the VAT at the point of bringing the goods to his country. As you can see, the pre-EU laws are a bit outdated.

raarts 9y ago

Personally I find the sales tax system in the US much more complicated. At least in Europe the percentages are the same within each country, but in the US they differ per state, county and even per town.

Silhouette 9y ago
At least in Europe the percentages are the same within each country This isn't actually true. There are quite a few dependent territories and the like that are part of the same country but have different tax arrangements. There are also multiple VAT rates for different types of product or service in a lot of countries, with different rules from place to another about which products or services attract a lower rate.
- raarts 9y ago
  Sure. The table can be found here[1]. But let's not pretend it's more complicated than it is, for a company that operates in a specific market, usually their products fall within the same VAT category. Unless you're Amazon or Bol that sells a range of products. In the US you basically can be sure that sales-tax varies by zip-code. I worked for a telecom company in the US that sent all their invoices to a specialized company, to have them calculate the tax, before sending them out to their customers. It was too complicated to do that on their own. Also because tax rates can and do change at the whim of some local city-government for example. And as far as I know tax rates in the EU are determined by the country-governments only, which means not very often. [1] https://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/taxation/vat/how_vat_works/rates/vat_rates_en.pdf https://ec.europa.eu/taxation_customs/sites/taxation/files/r...
  - Silhouette 9y ago
    You're right that many businesses will operate in specific markets, but even then it's still not always clear which rate should apply, and different classifications might apply in different member states or even different areas within the same member state. E-books were a controversial ambiguity when the new rules came in, for example. We could get more into how many technicalities there are in this system, but I think I'm just going to mention that the document you linked there is 116 pages long, which probably says all that needs to be said on that point. As for locations, there are plenty of potential gotchas there too. Would you like to guess the rule if the person who bought an e-book did so while on holiday on a cruise ship in the Mediterranean? And as for not changing very often, I think the shortest notice so far was just over a week from legislating the change to the new rate coming into effect (Greece in summer 2016). To this day, I'm aware of no standardised mechanism for alerting merchants to future changes in the relevant rates, nor any authoritative list of current rates available in a machine-readable format for automation purposes. So while I agree that we shouldn't pretend it's more complicated than it is, the current EU VAT situation is a complete mess full of traps and technicalities to catch out the unwary, and full compliance is effectively impossible. It's a bad system, made by people who don't understand how either digital markets or small businesses actually work.

zerostar07 9y ago

thats exactly what it is. And because small businesses can't lobby, nobody even acknowledges there's a problem.